A Wall Street legend and former partner of George Soros says he is willing to invest his entire wealth into North Korea and is on the look out for potential investment opportunities through China.
The Quantum Fund co-founder and prolific commodities trader Jim Rogers made headlines last year by suggesting North Korea would become a profitable emerging market and purchasing 20 one-ounce gold coins from the state owned Korea Pugang Coins Corporation to make the point.
Now, just a year on, Rogers is eyeing up new opportunities to move into one of the world’s last frontier markets, telling NK News that by investing in the DPRK “the returns would outweigh the risks”.
THE JACKPOT AND THE COMPETITION
In January, South Korean President Park Geun-hye described reunification as “daeback” (a jackpot), saying that she believed “reunification would be a chance for the economy to make a huge leap”. Rogers, it seems, would agree.
“What you’ll have is a country of 70 odd million people with cheap, educated, disciplined labor in the North, vast natural resources…with a big capital pool and management capability in the South. It will be a powerhouse”, Rogers says. “Once Korea’s united again its going to be a dynamic and exciting country.”
“It will be a powerhouse”
But Roger’s says it’s critical to penetrate the market prior to reunification – before international investors flood in to take advantage of the new opportunities.
However, there’s already strong competition from two of North Korea’s neighbors, China and Russia.
2011 data cited by Dr. Marcus Noland suggested China accounted for as much as 70% of North Korea’s foreign trade, with small and medium sized companies having an established presence in Rogers’ sectors of choice: resources and commodities.
Meanwhile, Russia has also been stepping up its economic cooperation with North Korea, re-opening a 54-kilometer train route linking the border town of Khasan and the ice-free port of Rajin last September while reinvigorating proposals to build a trans-Korean gas pipeline and railroad that would for the first time directly link Russia with Seoul.
“The Russians are now starting to make a push as well. They are behind the Chinese but they are coming to”, Rogers explains. “They want to make the Trans-Siberian railroad the transportation of choice to get goods from Asia to Europe.”
But casting his eye to the future, Rogers says he is also wary of the potential power of South Korean businesses once the peninsula has reunified.
“Those big South Korean companies are not going to roll over and play dead, they’re going to be racing in there as well…they speak the language, they know the country, they know the culture more or less and they are right there.”
COMMODITIES, RESOURCES AND THE REST
While much attention has been paid to North Korea’s alleged natural resource deposits and reports estimating the DPRK might contain one of the world’s largest rare earth oxide deposits, Rogers is bullish on other opportunities.
“Yes, North Korea has vast natural resources, metals and minerals which have not been fully exported which can be, could be and will be” Rogers says.
But given North Korea is so far behind its neighbors in being able to provide products, goods and services, Rogers believes there may be far quicker opportunities for investment.
“They don’t have anything in North Korea. Internet, telephones, sheets, towels and anything that you are good at there is a market for in North Korea and it will do well” Rogers says.
“I am investing in the future and in change”
All the same, opportunities for U.S. investors remain heavily restricted due a tightening sanctions framework which prohibits the vast majority of U.S. financial interactions with North Korea. And there’s no sign of that framework easing any time soon, with the North increasingly ostracized for both human rights atrocities and ongoing nuclear weapons development.
Nevertheless, Rogers say’s he’s wary of these deterrents but argues foreign direct investment can often help bring about positive change – and that is what his potential investments will be geared towards.
“I am investing in the future and in change I don’t condone any kind of that madness (human rights abuses) but it’s the change that’s coming that I’m investing in”, Rogers said.
Picture: Gage Skidmore